Capital Allowances for 2008/09

pmorrison_2

Hi, Im just in the process of filling out my tax return and have a question about the rules for capital allowances. I am a self employed gardener and have to claim against my purchases. Am I right in thinking that the rules have now been changed and I can now write off the full 100%, rather than the previous first year percentage?

Also, what happens to capital allowances carried over from previous tax years?

Thanks for your help.

pmorrison_2

Anyone have any info on this?

Elaine_Wilson

Basically you are correct. The first year allowance has been replaced with this annual investment allowance. So, you can claim 100% of the qualifying capital expenditure (up to the limit of £50,000).

The balance on the asset pool brought forward will be eligible for the normal writing down allowance which is now at a rate of 20%, as opposed to 25% previously.

Calculate the balance brought forward plus any additional expenditure not qualifying for AIA minus the proceeds of any assets sold in the period. The WDA is calculated on this figure. However if the figure is less than £1,000 you can write the whole lot off in one go.

Remember that all of these claims can be reduced. The percentages are only the maximum allowed. It may not be beneficial to claim for everything.